Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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Have you ever had a craving for some food which you have never liked before? OK, I know the ladies who have been pregnant before might have experienced this but what about us guys? Well, I have never enjoyed porridge much. So, being on a low carbohydrate diet, it is one thing I do not miss.
However, whenever I am feeling unwell, I seem to crave porridge. I don't know why it is so. When I told a friend I have been having porridge recently, he asked what about my low carb diet? When I told him I have been preparing porridge without using rice, he was dumbfounded. His expression was priceless and I thought my porridge recipe might be blog worthy.
.
Heat up some frozen fried chicken, frozen cooked vegetables (carrots, broccoli and cauliflower) in a microwave oven. 800 watts, 3 minutes. Then, put them in a blender with some hot water.
Blend and we get this. Porridge.
I added some black pepper for taste and also a spoonful of olive oil so that the meal keeps me full longer.
Sedap!
Time taken to prepare the meal? 5 minutes or so. Cost? Probably less than a dollar. Add an egg if you like.
Cost?
Probably still less than a dollar.
What did you say? Spend 5 hours preparing the perfect bowl of porridge?
Hey, do you think I am really mental? OK, don't answer that.
Eight out of twelve young Singaporeans have yet to plan for their golden years. A reader asked on Facebook what was the point of the blog which I posted last evening?
Alamak. AK is a mental blogger lah. Most of the time, he is just talking nonsense. Crazy fellow. I like to think that everyone's life can be better and it should be better if we have been prudent with money and if we have not been too unlucky in life. I also like to get things I need and want for free. If I can get someone else to pay for things I need or want in life (legally and ethically), I would.
Regular readers might remember that I said I invested in QAF because I want free bread. Old Chang Kee? I want free curry puffs. So, what about investing in NTUC Income for income? I want to have some life insurance coverage for free. Of course, don't take what I say literally but you get the idea.
MY BANK ACCOUNT by Tian Long. ROFL! Most of us are not born with a silver spoon in our mouth. We have to find our own way in life and, hopefully, we do not end up in hole full of snakes or spikes.
Snakes are natural while spikes are man made. Yes, there are people out there who are hunting other people.
We have to learn and avoid such holes.
How to get rich quick? Don't ask me.
How to get rich slow? See this?
Yes, it is something I am reminded of on a yearly basis.
This is money I stashed away donkey years ago and till this day, I am still enjoying the benefits.
I have probably taken back all my money and if the company continues to do well, I will continue to receive some pocket money on a yearly basis.
Of course, on its own, it is not a lot of money but if we focus on the absolute sum, we miss the point.
"Aiyoh, I can only invest $5,000. 6% is only $300 a year. So little. Don't bother lah. Waste time lah."
Continue saying something like that and, all else being equal, really, don't bother thinking about a comfortable retirement. Waste time lah. Related posts: 1. Secret to AK's success. 2. Investing in INCOME for income.
Reader: A senior of mine at work told me about your blog when we chatted about stocks. I mentioned Hock Lian Seng and he said AK blogged about it. I bought this because my broker told me it was worth at least 69c and that there was a special dividend. I paid 62c but the price has plunged. I wonder if I should hold or sell or buy more. If you are wondering, I just started investing this year and I don't know who to trust now.
AK: Trust yourself. Trust no one else, not even AK. I have nothing against your broker and I think I know which brokerage he is from but don't trust him either. Don't rely on others for investment tips. Buying something because it was a hot tip could end up burning you.
You have to have an idea of what you are looking at and how much it is worth. Only then would you have an idea if the price makes sense. If the price doesn't make sense, is it because it is too cheap or too expensive? Then, you know what to do.
Having said this, as investors, we cannot expect a 100% hit rate. If we can be right more often than we are wrong, we should be happy. Sometimes, we can do all the research we could possibly do, be reasonably confident and still be wrong. The only one who is always right is Mr. Market.
Those who bought then and bought more as the price declined would be bleeding badly.
If you are not prepared to do some work as an investor, it is better for you to stay away from the stock market. Related post: Hock Lian Seng returns more than 100%.
I received a small handful of messages regarding Old Chang Kee's latest results and this is a quick blog about the matter. Old Chang Kee is a fantastic cash flow generating machine and it remains one of my better although smaller investments. I have no intention to let go of my investment because nothing has changed. Of course, when I saw the article in The Business Times declaring a huge loss for Old Chang Kee in Q4, I took notice. I spent one minute looking at the financial statement and decided that all is well. One minute? Yes, only one minute.
I just looked at the income statement to see what has changed. Noticing a spike in expenses, especially other expenses, I scrolled down to find the reasons for the spike. What I was looking for was whether the spike was going to be material and whether it was going to be enduring in nature. Some of the increase in expenses will continue to be challenging. Labour cost. Rental cost. You get the idea.
However, most of the increase in expenses comes from a revaluation loss which is a non cash item. Non cash item does not affect cash flow. So, unruffled, I went back to gaming. To be investors, we should pick up some basic knowledge about accounting. Leave the more complicated stuff to the professionals but we should have some basic knowledge.
Hi AK, I wrote to you a few months ago and told you a prominent blogger sold all his investment in Croesus. I asked you if you would be selling too. You gave me one of your typical AK answers. Now, a few months later, I am kicking myself because I sold half of my investment since I was not sure if I should stay fully invested. It was my biggest investment. If I had your conviction, I would have avoided this loss...
Hi R,
I have the feeling that you might not have understood the investment enough to give you the conviction to hold on to a substantial position in Croesus Retail Trust. Your position could have been too big and peace of mind eluded you. Money not made is not the same as money lost. By holding on to half of your original investment, you are still making money. Lesser by half but you are still making money.
Peace of mind is priceless. By reducing your investment by 50% when you did, know it or not, that was what you were after. Now, please don't lose something precious like this by saying you should not have sold. Best wishes, AK Related post: History with Croesus Retail Trust.
Reader: Hey AK, what do you make of Accordia Golf Trust latest results? Looks pretty dismal, all important numbers are down. Any positives to it at all? AK: eh... you say leh? Reader: From the numbers I don't see anything good. But management says that tourism may have a positive impact in mid to long term And they said there was bad weather, maybe the weather might improve. That's about all the good I could see from the report AK: I would ask if the dip in results is due to something more enduring. If so, the decline would become a trend. Reader:
True. But difficult to say how much is due to earthquake and bad weather. And how much due to fundamentals. AK:
You will have to make a judgement call 😉
Reader:
I have small position only so I think I'll hold for now , at least the dividend is good AK:
If we are investing for income and if we got in at a lower price, this fits. 🙂
Reader: Just checking can you comment on SINO GRANDNESS rights issue? Is it worth subscribing to the rights? Thanks AK: Always ask what is the reason for issuing rights. It seems like they have trouble repaying debt and, hence, the rights issue. If so, the rights issue does not add value for investors. Subscribe if you believe that the company is able to do much better in future.
Reader: ok thanks for the advise. AK: If you are putting in more money but the performance declines, it is a bad deal. Reader: yeah
Remember, not all rights issues are created equal. Some will enrich investors and some will impoverish them. In general, I do not like rights issues which happen because the balance sheet needs strengthening. They weaken our own balance sheet and do nothing to improve our cash flow. Related post: A lesson on rights issue from 2011.
Hello! I only found out about your blog in Jan this year and have benefitted a lot from your analysis and sharing.
I have been reading your recent posts about upgrading to private housing. I happen to work in a landuse planning agency, hence i would like to share my views.
While i agree that one should not upgrade to a condo if it means overstretching your finances, i think getting a freehold property might be the only way to preserve the value of your property. For 99 year leasehold properties, they would eventually need to be returned to the state, and the value of the flats will depreciate after it hits around its half life.
From the capital preservation point of view, especially for couples who have kids and intend to pass down their properties to their kids, wouldn’t it still be worthwhile upgrading to a freehold property? The truth is that freehold land is scarce.
Was wondering when you bought your freehold condo, was the lease a major consideration? Would like to hear your thoughts on this 😊 Thanks!
I won't say anything about myself but if legacy is a consideration, then, buying FH or 999 years leasehold makes more sense than a 99 years leasehold property here. Oh, I don't mean buying a FH property in JB is better than buying a 99 years leasehold property in Singapore hor. That is not an apple with apple comparison. Sorry, I couldn't resist that.
What happens to our CPF money used to buy a HDB flat when the lease ends? Reader: can I assume that whatever has been used to pay for the flat will be forfeited and we still need to pay back the accrued interest? I have friends who are paranoid over the lease issue cuz they keep on reading the anti hdb and anti CPF articles. End up frightening themselves.
AK:
Tell your friends it is the same anywhere in the world. Leasehold means there is a limited life. Once it is gone, it is gone. Money from CPF used in the purchase of such flats at the end of the lease is gone. Logically, if the money is gone, how to pay back?
Reader: My friend just bought a 940k EA resale 30++y flat recently.
Simplistically, if there is 65 years left to the lease, the reader's friend is paying about $15K a year to "lease" the flat. Of course, if we take into consideration time value of money and interest on a housing loan (or interest he could have made if he had not used his CPF money in the purchase), it would be more than $15K a year. It is good to know that more people are thinking about this issue but don't over think. There is no conspiracy to impoverish anyone.
BTO HDB flats are the most affordable form of housing for Singaporeans and they come with a 99 years lease. Even if we were to live to be a hundred, the lease is more than enough. The worry is when people pay top dollar for much older 99 years leasehold properties.
There is regulation in place to guard against CPF members from buying much older 99 years leasehold properties using their CPF money:
We have to pay for the roof over our heads.
There is no free lunch in this world.
If we get something for free, someone else is paying for it.
If we are staying for free with our parents, it is because they paid for the roof.
People who want the CPF money which they used to buy their HDB flat returned to them after the expiry of the 99 years lease are looking for a free lunch.
As my blog's readership grows, a question that gets asked more and more often is: "When will I have as much passive income as you?"
Of course, one of the things I would say is that we have different circumstances and that financial freedom is not a race. All of us who reach our goals are winners. Some might take longer than others but they are still winners at the end. Distilled to a word, patience.
In my retirement, I spend quite a bit of time gardening and, a few months ago, I took three cuttings from the mother Rosemary plant and planted them in a trough.
Today, I transplanted one into its own pot. It has been a few months but, for a Rosemary plant, its growth has been quite fast.
The other two cuttings are still nice and green but they have not grown much. Their time will come too. They are probably late bloomers. They are not in a rush and neither am I.
"When I find a stock that sells for 50 per cent of what I have determined it is worth, my job is basically done. Now it is up to the stock. It may move up toward its real worth today, next week, or next year... There is simply no way to know when a particular stock will appreciate, or if, in fact, it will."
(See related post no. 2)
Businesses can either be price setters or price takers. In a fiercely competitive environment where there is perfect competition, businesses are mostly price takers.
Customer:
"How much is this?"
Shop:
"$20.00"
Customer:
"Aiyoh, internet selling $10.00 only."
Shop:
"Oh... OK, $10.00."
If I were the shop owner and if this were to happen on a daily basis, I have something to worry about.
Of course, businesses could engage in anti competition moves and set prices if there are only a few players in the industry. So, in an oligopoly, there is always a temptation to fix prices. This, by the way, is illegal in many countries, including Singapore.
A business is in a sweet spot if they are price setters and consumers are willing to pay a higher price for what they offer.
Customer:
"How much is this?"
Shop:
"$20.00"
Customer:
"Internet selling similar for $10.00 only."
Shop:
"Then, you buy from internet lor."
Customer:
"No, I like this. OK, $20.00"
Ka-ching!
How does a business get to be in such a sweet spot?
Differentiation.
Better quality, better features, better design etc. Something that differentiates them from the competition in a positive way which makes consumers willing to pay a premium.
This is not an easy feat.
It is even more difficult to maintain this edge these days because copy cats are fast to act.
What? You have a patent? Try telling the Chinese factories.
So, if it is a product, be prepared to see copies within a matter of months, if not weeks.
What about businesses which are providing a service?
Well, they are not safe from copy cats either. Business models can be copied too.
Some are worried about the competition faced by Centurion when it comes to workers' dormitories as more players jumped on the bandwagon.
It is a valid concern and I did say that I would keep an eye on this relatively new investment of mine. So far, so good.
Of course, I am not the only one keeping an eye on Centurion and a reader recently sent me a report by PhillipCapital dated 19 May.
I am sharing the stuff which I find more interesting here:
1. Higher occupancy for workers’ dormitories at Westlite Woodlands (c.95% in 1Q17 vs. c.90% in 4Q16) and ASPRIWestlite Papan (89% in 1Q17 vs. 75% in 4Q16). We estimate rental rates increased c.1%. 2. 1Q17 net profit margin improved to 33% compared to 32% a year ago. The improvements to net profit margin was due to ASPRI-Westlite Papan becoming more profitable in 1Q17 but slightly offset by higher Cost of Goods (“COGs”) and higher interest expense. 3. Centurion continues to enjoy a high operating leverage where they will be able to grow revenue faster than costs through positive rental reversions. 4. Singapore Workers’ Dormitory Portfolio have almost hit full occupancy by 1Q17, well ahead of our expectation of hitting full occupancy by end of 2017. We expect the supply constraints in workers’ accommodation to continue while the strong pipeline of public sector construction projects which are expected to last till 2020 will keep Centurion’s Singapore workers’ dormitories fully occupied. 5. We are pleased to see Centurion’s ability to command a price premium for its Singapore workers’ dormitories and yet ramp up its occupancy faster than expected. All these despite competitors slashing prices and weaknesses from the oil and gas industry that we have witnessed in 2016. 6. ... expectation for stronger operating cash flow as a result of Centurion’s continued ability to exercise pricing power in its student and worker accommodation business across markets ...
In a competitive environment, we want to invest in a business that is able to retain pricing power.
Centurion Corporation Limited is a relatively substantial investment for me and if I were to update the list: From $350,000 to $499,999:
AIMS AMP Cap Ind'l REIT From $200,000 to $349,999:
ACCORDIA Golf Trust CROESUS Retail Trust
FIRST REIT From $100,000 to $199,999:
ASCENDAS H-Trust QAF Limited WILMAR Int'l
Centurion Corporation Limited
Reader: Hi AK, apologies for the multiple questions from me. 🙂 I am looking to help my parents with their retirement planning and hope you could shed some light. For convenience of calculation and discussion, assuming the following hypothetical figures, can you share how you would do the planning? Parent A - 500k cash parent b - 300k cash, Zero CPF for both, No existing loans at all Children all financially independent Require about 2k per mth for expenses Occasional traveling Given the above I was thinking of topping up their retirement account to the ERS and opt into cpf life at 65. The remainder will be kept in minimum risk instruments like FDs etc and maybe just a small percentage into shares. Hope you can help me out in your free time. Thanks a lot! Both parents have basic health insurance. I am thinking of getting them to surrender their whole life policy bought donkey years ago with low sums assured as we children are all financially independent.
AK: What you are planning to do sounds like what I would do if I were in your shoes. Spooky! Old folks should not be too adventurous with their money. Reader: I read your blog daily! I guess that's where I get all my thoughts mainly. Can't thank you enough!
180 sq ft micro apartments sold like hot cakes. Do you know that a car park lot in Singapore must be at least 124 sq ft in area? That is the rule by LTA.
Do you know how big is the smallest flat in Hong Kong? According to an article in The Sunday Times, it is 61.4 sq ft! That is smaller than the smallest hotel room I have ever stayed in!
There are more and more homes which are less than 200 sq ft in size being built in Hong Kong and they cost about HK$4 million or S$725,000 each.
Now, for those who wonder how I could stay comfortably in an apartment that is a bit bigger than 400 sq ft in size, what about one that is smaller than 200 sq ft in size?
200 sq ft is probably the size of a decent hotel room with a bath. I feel that it is good enough for a short stay of maybe a few days but to stay for a longer period, it could be difficult for me. I actually stayed in a junior suite before because I got a good deal.
Similar in size to my current place but missing an outdoor space, it was very comfortable. See the photos: HERE. I feel that my apartment gives me just the right amount of space for living comfortably long term. A kitchenette, a living cum work space, a bedroom, a wardrobe, a bathroom and a small outdoor space. Everything I need in the smallest apartment I ever stayed in.
With only 200 sq ft, I think I would be left with just the bedroom and the bathroom. I would have to eat out all the time and I would probably want to go out a lot more because there is no outdoor space.
Hmmm, OK, I guess these nano apartments (yes, they are even smaller than shoebox apartments) could work for people who don't cook and who spend very little time at home.
When are we going to see some nano apartments in Singapore, I wonder?
(AK is an IT dinosaur.) I am too lazy to visit forums or chat groups. I am also too lazy to visit other blogs. So, when I do leave a comment in other blogs from time to time, it is an "OMG, give me a set of lucky 4D" moment.
Listening to a friend and setting up a Facebook page was a giant leap forward for me. Some might not know this but I abandoned that effort after a while donkey years ago, preferring to just stick with blogging. I didn't see any need for Facebook.
Then, how did I become so active in Facebook in recent years? I was getting bored with just blogging. Sounds familiar? Yes, boredom was a big reason why I started blogging too. Anyway, there is enough interaction with people through my blog and Facebook page to keep me busy. Add the liberal number of emails and PMs on Facebook, I am kept quite busy online.
Human beings are social creatures and they need some social interaction. How much interaction we need will differ from person to person. For some time now, I very much keep to myself and, fortunately, I like my own company. I don't know if it has anything to do with ageing or, maybe, it is a mental illness. Whatever it is, I do what makes me happy. Although I do not visit forums, sometimes, I hear things from readers especially if these things involve me. A friend once joked that ASSI has its own vigilante corp. Perhaps so.
This was from a reader this morning:
AK: AK: If I am in the business of investor education, I would show face but I am just a blogger. I do this for fun. Reader: leong revealed his portfolio size Liao He full time like u lah Unbelievable 34yo 2-3 yr of your dividends can form his portfolio I dono how he survive leh considering he getting married, commitment sure a lot 300-500k portfolio size how to retire? now got human capital don't leverage
AK: I think his CPF account is probably wasted One should have a holistic approach towards financial freedom, I feel.
Of course, all of us have different circumstances and there are many ways to build wealth. It is never my way or the high way.
(You might want to watch what I feel is an interesting video clip below.) Related posts: 1.What makes us powerful? 2. Holistic approach to financial freedom. "My philosophy in wealth building might be boring and it probably isn't suitable for everybody. Some are happy adopting it and it is only normal that some will brush it off."
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